Question

Sheffield Corporation makes a mechanical stuffed alligator that sings the Martian national anthem. The following information is available for Sheffield Corporation's anticipated annual volume of 524,000 units. Per Unit Total Direct materials $ 6 Direct labor $11 Variable manufacturing overhead $17 Fixed manufacturing overhead $3,144,000 Variable selling and administrative expenses $17 Fixed selling and administrative expenses $1,572,000 The company has a desired ROI of 25%. It has invested assets of $31,440,000. Compute the total cost per unit. Total cost per unit $enter the total cost per unit

Answer 1

Answer:

Total cost per unit using absorption costing = $34

Explanation:

Absorption costing is method of costing where overheads are charged to units produced using volume-based bases. e.g machine hours, labour hours e.t.c. Units are valued using full cost per unit  

Full cost per unit= Direct material cost + direct labor cost + Variable production overhead + Fixed production overhead

Fixed production overhead = Budgeted overhead/Budgeted production units

unit cost for 2,000 units  

Fixed production overhead = $3,144,000/524,000= 6

Total cost = 6 + 11+ 17 = 34

Total cost per unit using absorption costing = $34